A client recently approached us as he was considering renting out two spare rooms in an apartment he lives in via a short-term letting website. Whilst, this does appear a good idea to earn some extra cash, he was wondering whether this would be permitted in the terms of his leasehold?
Q: ‘I own a three-bedroom apartment and I am thinking of using two of the bedrooms to make some cash by renting them out through the Airbnb holiday website. However, my girlfriend says I might not be allowed to do it because of the lease. Why would that be?’
A: Although you own your flat, you are likely to have a leasehold interest in it.
Accordingly, before embarking on letting your rooms through Airbnb or a similar site, it is important that you consider the terms of your lease very carefully. There are likely to be various restrictive covenants listed in your lease and if you breach them, there could well be serious ramifications for you. Your lease is likely to include restrictions in regard to the use of the flat.
For example, it may say that the flat can only be occupied by one family unit or by a cohabitating couple, or there may be restrictions prohibiting you from using the flat for business purposes. Using two of your bedrooms in the way you propose is likely to breach those restrictions.
Furthermore, if you have a residential mortgage which is secured on the apartment, and if you were to use the property for short-term lets in this way, you would likely be in breach of the terms of your mortgage because you would be using a residential property for business purposes.
In addition, the letting of a property is only generally permitted if the mortgage is of the buy-to-let variety, rather than a residential mortgage. Finally, you may require planning consent to rent the bedrooms through Airbnb.
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